The Remunicipalization of Water

After the binge of privatization of municipal water systems in the 1980s and 1990s, citizens and city governments are starting to realize what a big mistake they made.  Privatization resulted in higher rates and lower water quality, service and public accountability.  As William Harless describes in the Wall Street Journal (August 19), many municipalities are now mounting lawsuits and ballot measures to try to regain control over systems that they had ceded to private companies.

In Ojai, residents will vote next week on whether to buy back their water system from Golden State Water Co., a move that the company opposes.  A lawsuit in Worchester, Massachusetts, is trying to regain public control over the city’s water system, which had been sold.  And in Connecticut, some towns are objecting to higher rates that have resulted after their systems were acquired by Aquarian Water Co. of Bridgeport, Connecticut, which consolidated the rates for the towns it serves. 

It is satisfying to see the glittering promises about privatization exposed for what they are: glittering promises.  For more on this theme, check out the work of a group called In the Public Interest, one of the most aggressive Washington, D.C.-based policy opponents of privatization in the US.  The group's website has lots of materials explaining how and why privatization of public resources is a bad deal for taxpayers and citizens.   

The number of Americans served by privately owned water systems fell 16 percent between October 2007 and October 2011, according to a 2012 report by Food and Water Watch.  In this same period, the number of people served by public systems rose by 8%.  Last year, 42 million Americans were served by private community water systems, while 300 million were served by public systems.

At the Berlin Economics and the Commons Conference held in May, law professor Ugo Mattei described his experience in attempting to remunicipalize the water system of Naples, Italy.  Mattei and his commoner-colleagues didn’t just want to regain public control of the water system; they wanted to institute new forms of commons-based management.  It turns out that this is an exceedingly difficult proposition because of the biases of tax law and labor law, and the management expertise needed to run a water system. 

“No matter whether you are a revolutionary or reformist, the neoliberal order is biased toward the private,” said Mattei.  “The law makes it extremely easy to privatize resources.  If you are a municipality and want to sell your water company, you will find it very easy from a legal point of view.  But there are no laws in the Italian legal order that shows you how to go the other way around,” he said.

“What happens if a municipality changes its mind after it has privatized a local public service?  Or decide it was a mistake?  Can you do it?” asked Mattei.  “The answer is simply no.  You have to force the legal system to permit it through a re-interpretation of the law.”  And that re-interpretation, he said, may or may not be viewed favorably by a court. 

Sobering words that cities and towns should ponder before moving ahead with future privatization plans.  But at least the fantasies about "free market solutions" for water have been laid bare.